February 2013

We are still looking to get long, and the subtle 'external' peak at 1594.50 shown in the chart could provide the means to do so via camouflage.  This trade set-up will work best if the rally to that peak is labored and choppy. If it is strong and easy, however, and therefore enticing to the herd, you should be prepared to initiate the trade via a buy-stop that comes up quickly. Ideally, the required b-c pullback will have come from within the range  1594.60-1595.10. I've sketched this out so that you can see exactly what kind of pattern will produce the best odds for us. _____ UPDATE (February 26, 2:48 a.m. EST): The pattern played out more or less as drawn, but entering on the 1594.50 'x' signal took us only to the 1597.00 midpoint and a partial profit before things turned south. The failure of this minor ABCD pattern to reach its D target (see new chart) suggests more weakness ahead, so traders should be especially cautious if positioning from the long side.

[Update: Comex April Gold bounced $30 on Thursday after making a marginal new low at 1554.30.  Bulls are not yet out of the woods, but they should take encouragement from this bear-trap price action. If the short-squeeze does persist for a second day, generating a weekly close above 1594.50, bulls will be back in business if not yet back in the driver's seat. RA] Is it Katie-bar-the-door-time in gold?  We seriously doubt it, although we wouldn’t blame bulls for feeling despondent after yesterday’s sharp decline, the second in a week. The April Comex contract plummeted to an intraday low of 1558 on Wednesday before reflexive buying provided a modest bounce in after-hours trading.  The good news is that the low was pretty close to a trendline that just about every gold trader on earth must have been watching. With such a devoted following, it’s hardly surprising that this technical support was breached marginally, presumably to put the fear of the lord in wanton speculators. But there are some troubling facts as well. For one, considering how many bulls probably got stopped out when the trendline was penetrated, the futures should have shown more pluck on the rebound. This is just simple physics, since, once gold’s fair-weather friends and perhaps more than a few true believers had been shaken loose, profit-taking on the subsequent rally should have been greatly reduced, lightening the ascent. Oh well. Perhaps spirited bargain-hunting will commence on Thursday, driving gold back above $1600 and out of the danger zone. Reason for Caution Even if that were to occur, however, there would still be reason for caution. That’s because at $1558 the futures were trading $12 beneath a Hidden Pivot correction target we disseminated to subscribers a while back. It kept us on the right side of the

The stock has been a tease for so long that I thought it might be time to think about jumping back in. Alas, the first promising camo opportunity sevened out yesterday, hinting that even lower depths will be plumbed before a bottom is in.  The big-picture target was 32.23 (shown in a daily chart inset: A= 40.97 on 11/9/12; B=34.78 on 11/16, C=38.42), but if you used the 3-minute pattern shown to get long via camouflage, your joy was short-lived. I am featuring this trade to demonstrate that first-chance entry signals work almost invariably when a stock is ready to turn.  The implication in this case is therefore that even lower prices are coming. _______ UPDATE (1:24 p.m. EST):  Speaking of SLW being a tease, the stock explosive 3% head-fake this morning, launched from the opening bar, has completely fizzled. SLW is currently trading 32.53, down 0.67 from the fleeting high.

Following Wednesday's nasty selloff, the futures were not getting much loft on the rebound.  Now, rather than splitting hairs with a Hidden Pivot target drawn from the lesser charts, we should probably accept the likelihood that a test of May's key low at 1538.70 awaits.  Whether it holds or not, it will be a great place to look for an uptrending abc pattern with which to leverage a speculative 'camo' long.  Camouflage trading is perfectly suited to this task, and so, amidst whatever fear, panic and confusion is generated when the futures flirt with the low, we should look for our opportunity in bullish impulse legs on the lesser charts.

Several market bellwethers have gotten close to potentially important rally targets, but there's no rule that says the targets must be precisely reached before stocks can turn down with a vengeance. Check out the update to the DJIA tout, since it specifies precisely where the blue chip average would have to trade today to generate a bearish impulse leg on the hourly chart.

Our cheap butterfly spreads in Google have provided us with a nearly riskless way to play the upside. As we'd expected, strength in the broad averages has been amplified by Google (if no longer by Apple).  Even so, with some key vehicles getting close to important rally targets, we shouldn't count our chickens in GOOG before they hatch.

We hold a dozen June 130-March 130 put calendar spreads for 1.50, although the stock never got close enough to a 140.71 target to trigger a companion bid for March 137 puts. We'll sit tight with the position for now even though there are higher targets outstanding for some other vehicles that we trade.  Our goal is to roll the spread by selling April and May 130 puts in succession later on. With any luck, a slow decline in DIA will allow us to more than recoup what we paid for the June puts, effectively giving us free, leveraged exposure to whatever weakness develops.

I've recalculated the 14085 target as carefully as possible and come up with a new one, slightly higher, at 14098. It is short-able, but only via camouflage in a corresponding vehicle. (Note: We are already effectively short the Diamonds via some put calendar spreads.) The target is interesting because it would be odd for the Indoos to take such a puny last-gasp leap following a consolidation that has been developing for three weeks.  Stranger things have happened, though, and the target should be deemed sufficiently reliable in any case that its easy breach would imply that there is significant buying power remaining to be spent. _______ UPDATE (10:48 p.m. EST): I've set a chart alert at 13906.72, since that's exactly where the hourly chart would turn impulsively bearish today. _______ UPDATE (February 21 at 8:59 p.m. EST):  A low at 13834 generated the bearish impulse leg described above (see inset). That implies that the rally from yesterday's low is corrective and therefore short-able, presumably via camouflage.  We'll know whether buyers have been sapped of vigor once we've seen how the follow-through down-leg handles the p midpoint support. _______ UPDATE (February 25, 2:02 a.m. EST):  We'll back away for now, since the gratuitous ups and downs are getting a little freakish, if not to say fetishistically involved with 14000. This is how we've been expecting a top to be formed, since there are ten million of us oh-so-eager to get short.  However, if we do so at these levels, it'll be strictly on the basis of Hidden Pivot targets, of which there are no especially useful ones at the moment.

Although technically speaking it is presumptuous to say this, the stock market's cheerless, reflexive steps higher almost each and every day now feel like a march to the gallows.  Granted, there would seem to be no alternative to the by-now-relentless ascent of shares, given that they are being driven by a monetary blowout global in scope and unprecedented in magnitude.  Even so, hope springs eternal that this pernicious and presumably doomed dynamic will end soon, administering the shock that will jolt humanity back to the realization that there is no free lunch. For our part, we are looking to get short at a very specific price and in a certain way. Our strategic options are detailed in yesterday's tout, and so I'll suggest that you call it up from the archive if you are uncertain about how to proceed.  I am not divulging my target publicly to non-subscribers, since, the fewer traders paying attention to it, the greater the odds it will work precisely.